E-NACH and E-Mandate in India

Today, fintech industry is working rapidly to solve the complexities of financial management system in the country. It is helping the industry with innovative business models and technologies to ensure efficiency with fewer regulations in every process. It is adopting the newly innovative mandate process which is digital to ensure convenience in recurring payments.

E-NACH & E-Mandate are promising payment services that enable people with a bank account to easily automate recurring payments. E-Mandate is a facility initiated by the Government of India through the National Payment Corporation of India.(NPCI)

E-Mandate & E-NACH are two different services, but both have a common purpose – to enable automated recurring payments.

E-NACH and E-Mandate are convenient ways for merchants and their customers to easily manage all the recurring payments like internet subscriptions,insurance premiums, SIPs, school/college fees or any recurring payment for the goods/services that merchants provide to their customers.

For example, if you are signing up for a digital tele-service plan through an E-Mandate, you can schedule all your recurring payments through a simple online process at the start of the tele-service plan, instead of manually keeping track and making individual payments.

This will eliminate the hassles of reminders & late payments & the penalty charges associated with late payments which is a win-win situation for both merchants as well as their customers.

Existing Mandate Process

A mandate is a standard instruction that you provide to your bank or other institutions to automatically debit the instructed amount from your bank account. The mandate is also known as NACH (NACH stands for National Automated Clearing House).

Until now most banks and companies process this mandate as follows:

  • The bank/institution collects a signed form from the customer. This form shows the customer agrees to have a certain amount of money automatically debited from his bank account on a repetitive basis, directly in the name of the bank/institution.
  • The bank/institution sends this form to the NPCI, which creates a Unique Mandate Reference (UMRN) and sends your application to the bank where you hold our account.
  • If the bank accepts this mandate, the institution will be able to directly debit your account.

This entire process takes about 7 to 14 business days depending on various factors. This time span results in various other business delays, inconvenience for the customer.

Proposed E-NACH Process

Compared to the manual mandate registrations, E-Mandate not only reduces the turnaround time but also lowers the operational risk arising because of manual validation and physical movement of forms. Automating the time consuming mandate process is proving to be one of the most efficient and easy alternatives.

E-NACH utilizes the services of NPCI’s National Automated Clearing House (NACH), to attain its objectives.

E-NACH has the following factors involved:

  1. NPCI– National Payments Corporation of India, which is the regulatory body constituted by the Government of India to oversee all retails payments in India. It was set up with the guidance and support of Reserve Bank of India (RBI) and Indian Banks Association (IBA).
  2. Sponsor Bank –These are the banks that are enrolled with the NPCI for the purpose of facilitating E-Mandate process.
  3. Destination Bank – This is the customer’s bank where he holds the account from which you want the automatic debit to be made.
  4. Corporate –The institution/bank for which customer has requested the E-Mandate so that they can auto-debit your bank account.
  5. Customer-Customer, who will be applying for the E-NACH .

The E-NACH/E-Mandate system assists in the issuance and confirmation of mandate by the customers through alternate channels to paper-based mandate.

The process is routed in a way that after authentication, the destination bank moves the mandate to the sponsor bank(or from the corporate to the sponsor bank) and then to the destination bank which includes customer’s attributes.

  • Creation of an authenticated mandate by the customer himself through electronic channels.
  • Shorter mandate acceptance cycle or auto acceptance of mandates.
  • Secured and assured mandate acceptance. The mandates are initiated by the customer or his banker.

The primary objective of E-NACH/E-Mandate is to reduce the burden of processing on the destination bank therefore all the aspiring participants on E-Mandate platform should implement end to end process automation including auto submission of authenticated mandates to NACH system.

E-NACH is one of the newest methods of electronic payment and thus is still in the early stages of adoption. There are around 10 banks that have already adopted E-Mandate and more are getting in line.

After UPI and Aadhar based payments, the next solution that can create a massive impact on fintech industry is E-Mandate. It is the next level of NACH aiming to create better ecosystem for facilitating clearing services.

Keeping the scope of E-Mandate/E-NACH in mind, we at Easebuzz look forward to enable our merchants to collect recurring payments from their customers by implementing E-NACH. The customers of our merchants will have to do a one time authentication transaction which will allow the merchant to auto debit amounts from the customer’s bank account, with a pre-decided frequency.


The author writes about fintech, banking, and future of SAAS services. He works as an SEO analyst at Easebuzz, so if you're looking for an account that tracks India's fintech scene, you should check out his Easebuzz blog.